21:24 GMT +322 September 2018
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    Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, January 17, 2017

    What's Behind German Economic Record and How It Affects Other EU Countries

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    The success of the German economy has a negative impact on other EU countries, economist Rudolf Hickel said in an interview with Sputnik Germany, commenting on the recent stock market developments.

    Germany's stock index, the DAX, has reached a new historical record this week, but economic expert Rudolf Hickel argues that this trend is associated with speculations on the stock market, rather than economic growth in the country.

    According to the analyst, the EU is experiencing a huge excess of exports over imports. Germany as one of the main exporting countries can rely on its exports while the euro is relatively weak.

    At the same time, the situation in other European countries leaves much to be desired.

    "The profits of DAX companies cause losses in firms in Italy, Belgium and France," Hickel explained.

    According to him, German exports are forcing the production from other countries out of the market.

    "The EU can't be happy about that, nor is the European Central Bank. It shows a split which at the moment takes place in favor of Germany," Hickel concluded.

    At the same time, chief analyst at the Bremer Landesbank Folker Hellmeyer views the situation in a different way.

    He believes that the national economies of Germany, Portugal, France and Italy are on their way to recovery.

    But assessing the prospects of further economic growth, Hellmeyer warns: "We are now enjoying the historic highs, but the sustainability of this level is questionable — mostly due to geopolitical factors."

    In particular, the economist drew attention to the situation in North Korea and Catalonia as well as economic problems in the US and the UK.

    "In the US, the economic recovery of past years was primarily financed by loans. The stability of this system, when everything is based on loans, is quite shaky," the expert noted, adding that a similar situation can be observed in the UK.

    According to the analyst, if economic indicators in the United States and Great Britain continue to decline, it would immediately and seriously affect financial markets worldwide.


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